Real Estate Dilemma: Renting Vs Buying

Real Estate Dilemma: Renting Vs Buying

It’s not an easy decision – to rent or buy a home or unit. There are obviously advantages and disadvantages to renting and owning. And it’s important that you are aware of the pros and cons so that you are properly guided when you have to make the decision.

Advantages of Renting

Whether it’s a home or a unit, renting has its advantages over outright ownership.

Its biggest advantage over home ownership is that you don’t need a deposit which you would need to raise if you are buying a property. By industry standards, you would probably be required to pay advance rental of two weeks and a deposit of 4 weeks.

Minimum maintenance. The property owner has more investment in the property than you so it’s most likely that they want to keep the property in tiptop condition. It’s highly likely that they will make sure that the property is well maintained at their own cost. That gives you maintenance savings.

Disadvantages of Renting

Lack of Landlord Experience. If the owner is a private individual with no prior rental experience, they might not be able to provide the management required of a rental property. This could mean longer times for the owner to take action on complaints or repair works.

Option to Increase rental. Unless you are able to strike a very good long-term deal with the owner, most rentals are increased after the expiry of the lease contract.

Advantages of Ownership

There are many benefits of buying a property. They include:

Long-term equity. You can build long-term equity if you buy a property. Property taxes and mortgage interest can be used as deductibles on income tax.

Security and Sense of Permanence. You don’t always have to worry about the lease renewal when you own the property. You and your family have a secure and permanent place to live. You have the freedom to decorate the house as you please. This aspect has limitations if you are renting.

Privacy. If you own the property, how you want it to look like is all your decision. If you rent one, you will have to seek written approval of the owner before you can even install a CCTV camera for security reasons.

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Disadvantages of Ownership

More expenses than you thought. If you own the property, you are to take care of the maintenance cost, taxes, insurance, all repair works, furniture and appliances, etc.

It is more difficult and expensive if you decide you want to move to a different location.